The Greatest Pain Points in VIP Today!

VIP, as a dedicated focus and skill within the iGaming industry, is undergoing a significant transformation. This is being driven by heightened regulatory scrutiny, intense competition, a shortage of trained and available VIP specialists, and the rapid adoption of new technologies. Part of the challenge that both new and established operators are facing is the formidable task of creating and evolving VIP programs that not only attract but also sustainably retain high-value players.

This VIP industry analysis conducted by WarriorLab was made possible through thorough collaborative research and engagement with key industry leaders, global operators, leading recruiters, and VIP professionals. In sharing their expert insights and specific case studies, some consistent pain points emerged irrespective of region or market variances.

The data from this research was collected from diverse geographies, including South Africa, Africa, Japan, India, Brazil, Canada, Australia, Portugal, Switzerland, Sweden, Denmark, Germany, the United Kingdom, and the United States of America.

Not only did we uncover several pain points that are critical hurdles in the VIP space globally, but some surprising trends and revelations also emerged.

These pain points have been streamlined as follows:

• Factors for Brand Differentiation.
• Adapting to Change.
• People, Training, and Technology.
• Engagement and Retention.
• The Compliance Balancing Act.

As a preface to this VIP industry analysis, which maps these pain points into key discussion focuses, specific geographical insights provided by those who participated in our research are outlined below as a global cross-section.

South Africa

• Lack of VIP structures in operator environments.
• Limited to no player awareness of or exposure to VIP programs.
• The regulated market is lagging behind its unregulated counterpart regarding VIP readiness.

Africa

• VIP programs often lack detection models or insights into potential VIPs. Since Africa has the youngest age demographic globally, potential VIPs are often overlooked because they present differently compared to other GEOs.
• With a lower Average Revenue Per User (ARPU), VIPs across the African continent must be considered with unique and relevant models that are differentiated from other GEOs.
• Limited to no regulatory frameworks around VIP.
• Technological blockers such as platform limitations and less developed technological infrastructure.
• Operations that run internationally with no local presence or where there is a misalignment between African-based operations and their HQs abroad have led to miscommunication, friction, slower project execution and innovation, and a disconnect with target audiences.

Japan, India, and Brazil

• Hyperlocalisation is a baseline expectation.
• The lack of native speakers working within VIP teams has been a leading cause of a breakdown of trust between operators and their players, especially when localised VIP programs are presented as authentic.
• Few customised VIP programs exist, often driven by an imbalance of prioritising and optimising both personalisation and automation.

Switzerland, Sweden, Denmark, Germany, and the United Kingdom

• Stringent regulations are driving VIPs to grey and offshore operators, compromising player protection and safeguards.
• Operator regulatory obligations are creating numerous friction points for VIP players, heightening non-cooperation and churn, and driving a wedge between VIP and Compliance teams.
• The majority of operators do not have a collaborative approach to VIP player onboarding.

The United States of America

• The fight between regulated and licensed operators versus offshore is ongoing.
• According to TheGamblest , unlicensed bookmakers in the US have a 65% GGR share. Unlicensed offshore operators who target the US market still retain a huge volume of VIP business. Their VIP promotional offers are generally more enticing, with additional deposit options such as crypto being leveraged to allure US VIP players.
• According to insights from regulated bookmakers, hospitality and face-to-face engagements are significant focus areas for VIP retention.
• Below is a breakdown of the US legal sports betting market based on the May 2024 publication by the American Gaming Association. Despite the increasing number of licensed states, the issue with offshore business persists.

Navigating the Challenges of VIP Programs in the iGaming Industry

"The VIP space in the iGaming industry is rapidly changing. Regulatory scrutiny, fierce competition, and new technologies make it tough to stay ahead. Established operators struggle to evolve, while new operators are overwhelmed by creating competitive VIP programs with unique selling points (USPs). This process doesn’t have to be costly or stressful. What do you think is the biggest challenge in establishing or evolving a VIP program?"

It was clear through the responses to this poll and the numerous DMs and discussions that ensued after the fact that brand differentiation and evolution, as well as sustainable VIP retention, are the collective challenges being faced by the industry. These challenges are explored more in-depth below.

Factors for Brand Differentiation

Operators across regulated, unregulated, fiat, and crypto markets are struggling to stand out in a highly competitive and saturated space. To add fuel to the fire, operators are feeling the pressure to present new, unique, and enticing VIP programs that remain compliant. Over and above this, these programs need to be presented and positioned as VIP-centric and alluring enough to attract new VIP business. Needless to say, this is a challenge in and of itself.

In an effort to differentiate themselves as "the most competitive VIP offering" and attract VIP players to sign up, many operators have resorted to over-the-top and unsustainable tactics that buy loyalty rather than earn it.

In response to this urgent need to differentiate, VIP referral programs have become a new USP that aims to support and augment additional layers of player value.

This is an innovative yet increasingly adopted strategy in today's modern VIP programs. It involves leveraging current VIP player bases to support VIP acquisition efforts.

Adapting to Change

Humans tend to be change-averse and creatures of habit. Like loss, most people think of change in a negative light, which clouds their ability to consider its potential benefits.

There is a need to strategise around resistance, as change often feels like walking off a cliff blindfolded. Often opting for familiar discomfort rather than heading towards the unknown, most people would align with the mentality of "better the devil you know."

As such, this is often one of the most challenging areas operators need to manage. Decision-makers need to navigate how to change and when to let go of outdated, non-competitive, and flawed VIP programs and models.

WarriorLab's CEO, Gali Hartuv , understands firsthand through building dozens of VIP programs globally how much time, effort, and energy goes into conceptualising, building, and managing such programs. From experience, it can be challenging, and even devastating, to let go of one's creation.

Changing a VIP program does not need to be complicated, and a full rebuild or redesign is usually not required. This can be mitigated by pinpointing the program's weaknesses or understanding the gaps and then reinforcing and updating the foundation of the preexisting VIP program.

In researching this pain point, the consensus showed the following major blockers to change:

• Internal staff and decision-makers.
• Fear of the unknown.
• A lack of knowledge or support.
• Resistance to the input and feedback of team members or non-managerial staff.
• Fear or unwillingness to ask for help when trying to implement change.

The key takeaway is to not reinvent the wheel if you don't need to.

Another key trend observed across the industry is the unveiling of hidden VIP programs to become public. The goal of enhancing acquisition efforts is predominantly driving this change.

As more operators recognise the benefits of public VIP programs and accept that these are built from the inside out and cannot be replicated in their entirety, operators are becoming more receptive to publicising their offerings.

People, Training, and Technology

This one is a biggie!

We are currently experiencing one of the largest skills shortages within the VIP space, resulting in an unparalleled demand for specialised VIP skills. As new VIP programs pop up and existing programs expand to accommodate VIP player demand, the requirement for more VIP personnel and skills has become a necessity. Increasing VIP market saturation, together with expanded player demand, means a shrinking player acquisition pool and heightened competition to attract VIPs.

Based on insights from dozens of global operators and recruiters (both in-house and global agencies), this skills shortage has posed challenges and a ripple effect in the hiring market.

The demand for VIP skills has reached the point where there aren't enough experienced hires to fill all vacancies. These challenges have also influenced hiring approaches and strategies, and not exclusively in a positive direction.

Before we dive deeper into some of these behaviours and trends on the recruitment side, in response to this skills shortage, operators have shifted their focus inward to solve the need to fill these roles. Operators are increasingly promoting from within Customer Service, CRM, and other internal teams in an effort to manage VIP player demand.

Through this shift in behaviour, new functions are being developed within the VIP space, such as VIP onboarding specialists, player development specialists, VIP CRM, and, most commonly, dedicated VIP Customer Support teams.

These new functions are predicated on drawing transferrable skills from non-VIP teams, where there is still valuable knowledge and aptitude to contribute to VIP efforts. Not only does this encourage greater staff retention, this supports the career growth paths of internal staff. Furthermore, internal knowledge is not only retained, but is enhanced through upskilling opportunities, VIP training, and the beneficial integration of inter-departmental knowledge sharing and collaboration.

It is understandable that with such a surge in demand for VIP skills and the rise of these newly created functions, training has become a necessity, let alone of paramount importance.

There is great demand globally for specialised VIP training and bespoke workshops to raise the bar of new or transferred hires and to ensure that the standard of VIP service is safeguarded.

This training needs to be developed and applied with a keen understanding of and sensitivity to the specific operator needs and areas for development and optimisation. Our research found that companies are struggling to develop and teach the required training material while simultaneously establishing VIP role-specific KPIs to ensure optimal and consistent performance.

Many operators are unsure of the resources or support that they can draw on outside of their operation to help with these training needs. Two external resources are currently available to cater to this demand: industry training academies and consultants or VIP experts who operate in this space.

Returning to the discussion regarding external recruitment, below is a summary of our research findings based on operator and recruiter feedback:

• Demand exceeds supply (availability).
• There is a shortage of language skills in the VIP space.
• Salaries are increasing to attract experienced candidates (2+ years is the most common search).
• Operators are searching for candidates who can offer strategic insights into VIP player management and have the knowledge to manage data and account analytics. The crux here lies in understanding how to extract and execute actionable insights from the data.
• Candidates' demand for remote work has increased across the VIP space.

As operators engage with these recruitment and VIP acquisition challenges, an emerging behaviour was flagged from various sources that leaves room for major concern.

Numerous incentive models have been reported to have been deployed across different geographies. These models allocate commission on NGR to Account Managers who "bring their own" VIPs with them to a new employer when moving over from their previous company.

The impact of these undesirable incentive models is the tightening of internal security measures, player data protection protocols, and in severe cases, deploying employee monitoring software.

While these recruitment efforts do not explicitly state incentives for VIP databases or encourage database theft, the commission is focused on profits derived from VIP relationships brought across, sometimes up to 12%+ on NGR.

In other, more troubling cases, Account Managers are being approached not for job offers but to sell player information to grey operators. The general amounts offered to buy these VIP players, subject to player conversion criteria, range between €500 and €2500 per VIP player.

Engagement and Retention

One of the greatest reoccurring challenges operators shared was how to sustainably retain VIP players. Discussions with operators revealed a lack of understanding of VIP retention value propositions and how to present VIPs with value as opposed to volume (i.e., quality over quantity). This balance is crucial to maintaining a strong value proposition without diluting the prestige associated with VIP status.

Through our experience in the engagement and retention space, coupled with the feedback received through this research, the greatest reoccurring pain points are:

• Over-Reliance on Bonuses.
• Cost of Generosity.
• Lack of tracking and visibility.
• Exclusive Experiences.
• Data-Driven Personalisation.

Regarding over-reliance on bonuses, many operators believe that more equals more. In reality, overwhelming or bombarding your VIPs with excessive bonuses diminishes the value proposition and perceived value in this high-net-worth segment. While this may initially attract high rollers, this often leads to bonus fatigue, abuse, and unrealistic expectations that cannot be met, resulting in inevitable churn. The compounding effect is that VIP players begin to view rewards as entitlements rather than privileges.

In addition to this effect on VIP players, excessive VIP generosity can strain financial resources. Operators need to find a balance between attractive yet sustainable bonuses and incentives. It is non-negotiable that operators need to have a clear insight into how bonuses are utilised and spent and understand their efficiency.

Dashboards, conversion metrics, cost analyses, and the popularity of bonuses are just some of the considerations that every operator should understand to manage and retain players sustainably.

When it comes to best practices for sustainable VIP value and retention, there are some actionable steps that can be taken that don't have to break the bank:

• Exclusive Experiences: Rather than focusing exclusively on monetary bonuses, offering VIP players unique experiences goes a long way. Invitations to exclusive events, meeting your players in person, personalised gifts, or bespoke gaming opportunities, for example, ensure that VIPs feel appreciated in highly personalised ways. This simultaneously enhances positive brand association through memorable experiences.
• Data-Driven Personalisation: Operators that leverage data analytics to understand individual player preferences and behaviours will be ahead of the rest. Personalised rewards and communication can significantly enhance the VIP experience, resulting in higher retention rates.

The Compliance Balancing Act

Navigating and maintaining sustainable VIP player value while adhering to compliance and regulatory standards is a tightrope walk for all in the industry. Regulatory landscapes are consistently in flux, and player expectations are more demanding in response to heightened competition and market saturation, leaving more bargaining power in the hands of VIPs. As such, the need to balance compliance and responsible gaming (RG) obligations with sustainable player value is as pressing as it is complex.

VIP players are the lifeblood of many iGaming operators, often contributing significantly to revenue. The success of long-term and consistent VIP retention and value depends on the mindset of operators. As operators, you're either approaching VIP as a quick money-making exercise with short-term vision, or you're playing the long game. There is very little in between.

While the short-term approach might result in more immediate financial reward, this inevitably leads to player burnout and higher churn rates. This results in exacerbated retention and acquisition costs and damage to brand reputation. This initial reward is not only short-lived but overshadowed by the downstream effects of such short-term thinking.

The long-term approach, conversely, sees an enhanced brand reputation that's aligned with greater profitability through being a brand that prioritises and safeguards player well-being in a player-centric model. When done correctly, this approach inspires player trust and loyalty and creates win-win scenarios where VIP players resonate with brands that care and are aligned with regulatory compliance standards. For any regulated operator, the knock-on effect is a more robust player Lifetime Value (LTV), greater business longevity and, ultimately, sustainable and responsible profitability. Positive regulatory reviews and public perception further solidify the operator's standing in the market, creating a virtuous cycle of compliance and growth.

The cost of compliance pales in comparison to the cost of foregoing such safeguards, which supports sustainable player retention and long-term bottom-line targets. Compliance and VIP teams need to collaborate to streamline and integrate the operational processes that govern VIP player management and RG. In this way, there is an opportunity to leverage the expertise and understanding of each function to support overall business objectives and operators' responsibilities in conjunction with regulatory mandates.

In the context of the increasing complexity of regulatory adherence, where RG is a cornerstone of regulatory frameworks worldwide, we are witnessing the rise of new compliance solutions and offerings that support player-centric models that are not mutually exclusive from profit at scale.

On this note, another key piece of this puzzle is a focus on data-driven compliance and player insights. Enabling both precision and foresight, leveraging data analytics and cutting-edge technologies is pivotal when it comes to artfully balancing player protection, sustainable VIP value and business growth, and building trusted and reputable brands that uphold the highest standards of regulatory adherence.

Advanced algorithms and AI can monitor player behaviour in real time, identifying signs of problem gambling and ensuring timely interventions. By integrating data insights into compliance strategies, operators can personalise their approach to VIP management, offering tailored incentives and support that align with regulatory and RG standards.

In conclusion, our industry is at a pivotal juncture, marked by rapid advancements, heightened regulatory scrutiny, and an ever-increasing demand for unique and sustainable VIP programs. The need to balance the allure of high-value players with stringent compliance requirements has never been more critical.

Our analysis revealed that while VIP programs are essential for attracting and retaining top-tier players, they need to be meticulously crafted to ensure long-term sustainability and regulatory adherence.

To summarise, our findings underscore several key themes that operators are encouraged to address:

1. Factors for Brand Differentiation: In a saturated VIP market, standing out requires innovation and a clear understanding of USPs. Operators need to move beyond unsustainable tactics and focus on genuine value creation through strategic VIP referral programs and personalised experiences.
2. Adapting to Change: While change is the only constant, it is often met with resistance. Successful operators are encouraged to cultivate a culture that embraces change, leveraging both internal and external resources to update and refine VIP programs without losing sight of their foundational strengths.
3. People, Training, and Technology: The current skills shortage within the VIP space calls for a dual approach of internal promotion and targeted recruitment. Training and upskilling are paramount, ensuring that VIP teams are equipped to meet the evolving demands of high-value player management.
4. Engagement and Retention: Sustainable retention hinges on delivering quality over quantity. Operators need to consider reducing their overreliance on bonuses and focusing on exclusive, personalised experiences that enhance player loyalty and satisfaction.
5. The Compliance Balancing Act: Regulatory compliance and RG are not just legal obligations but integral components of a successful VIP strategy. Operators are encouraged to leverage data analytics and AI to monitor player behaviour and ensure timely interventions, fostering a safer and more trustworthy gambling environment.

Operators who adopt a holistic approach that integrates these themes into a cohesive strategy will lead the charge.

The journey ahead is challenging, but with a strategic and player-centric approach, the rewards are well worth the effort.

Disclaimer: The VIP topics, opinions, and insights presented in this post are intended to encourage discussion and potential debate within the iGaming community. It is important to understand that the information provided herein is based on a combination of industry research, personal opinions, and conversations with verified sources. As such, it may not be fully comprehensive, exhaustive, or applicable to all situations or scenarios.

The content of this post is not intended as professional advice and should not be construed as such. We strongly recommend consulting with qualified experts or VIP professionals who can provide guidance tailored to your specific needs and circumstances before implementing any VIP Player Management strategy or program.

The authors and publishers of this post disclaim any liability for any direct, indirect, incidental, or consequential damages resulting from the use of the information presented. This post is provided "as is" without warranties of any kind, either express or implied. Your reliance on any information contained in this post is solely at your own risk.

Please note that the iGaming industry is highly dynamic, and the challenges and best practices discussed may evolve over time. Staying updated with the latest industry developments and seeking personalised professional advice is crucial for successful VIP Player Management.

For any specific questions or concerns, please consult a legal or professional advisor who is familiar with the particularities of the iGaming industry.